Moving freight within the continental US is one thing, but going abroad narrows down your choices. You can go with sea freight or air freight, and that’s about it. The former is slower, the latter is faster but more expensive… How much more, though? How much does air freight cost these days, anyway?
All transport costs are directly related to the state of the economy as a whole. In 2020, to no one’s surprise, trade has slowed down dramatically. As this McKinsey study shows, global trade flows have been halved, and it may take as much as two years for things to get back to where they were. This contraction is not exactly unprecedented, as the following graph shows:
Still, the effect that the global health crisis has had on the trade demand is undeniable. A reduced demand usually implies a reduction in cost as well, but that’s not always the case.
How are air freight costs calculated?
When it comes to air freight, several different factors contribute to the cost. We’ll outline just the main ones here.
Your typical freight forwarder will first determine the base rate for a shipment. This depends on the gross weight of the object being shipped, but also its volumetric weight.
- The gross weight is how much your shipment actually weighs, in pounds or kilos.
- The volumetric weight is a more abstract estimate, taking the object’s length, width, height, and density into considerations.
The freight forwarder sets the higher of these two measurements as “chargeable weight”. That’s what determines the base rate for your shipment, typically expressed in dollars per kilogram. This way, they seek to protect the carrier from losing money when shipping large but low-density freight.
In addition to the base rate, there are a few other factors that help determine your expense.
- The airline terminal handling fee is an expense that covers the processing of cargo at airports. It applies to both the point of origin and the destination but doesn’t fluctuate much.
- The container freight station fee adds to the cost of international freight transport. The longer your shipment is kept in storage, waiting to clear customs, the more you end up paying.
- And finally, the fuel surcharge is a fee that varies by region and season. As fuel prices go up and down, an extra couple of percentage points of your chargeable weight are tacked on.
Keep in mind that all these are listed just as points of reference. Depending on your choice of freight forwarder and carrier, there may be fewer fees involved… or there may be more.
Is there a way to reduce air freight rates?
There is a number of ways, but in truth, not all of them are available to the average client. If looking to save money in air freight shipping, consider the following.
- Timely planning. We suggest this for every type of transport, but it’s particularly applicable to air freight. Making the reservation well ahead of time can save you a hefty chunk of the not-inconsiderable expense.
- Prioritize better. Shipping by air is often the most expedient way to move freight, but that’s also what makes it costly. If time is not the absolute priority, maybe accept a shipment deferral of a few days or more? This can cut the rate considerably.
- Build relationships. As is the case in many other service industries, shipping companies offer better deals to valued clients. Using the same freight forwarder or carrier repeatedly can result in discounts.
Although these strategies don’t always work, keep in mind that air freight shipping was never a budget option. If you’re not the type to flex your bank account, different modes of transport are still readily available!
We hope that this brief overview of the air freight cost structure was informative. Whether in the middle of a global health crisis or during its aftermath, we believe it’s a topic well worth examining.
Stay safe, and happy shipping!